There are obviously things seriously wrong with the housing market in the UK. But according to The Intergenerational Foundation, it is primarily about unused bedrooms in houses hoarded by older people!

Hoardistan

“Hoardistan” is a country with a housing problem which results in younger people struggling, and often failing, to buy the sort of houses they need. They have difficulty buying their first house before they have a family, and further difficulty buying a larger house when they have children. Meanwhile, older people who have managed to “buy up” to larger houses during their careers and whose children have now left home often have spare bedrooms, and are accused of “hoarding”.

Types of (potential) house-owners in Hoardistan

Young childless people:
These are young people or couples currently without children, therefore only needing a small house. Being young, there is not much money available to buy an expensive house, nor much useful credit history that would enable a large loan.

Young people with family:
These are typically couples, about the same age or older than Young childless people, typically a small and young family. They need a larger house than Young childless people would need, but are unable to afford an expensive house for the same reasons that Young childless people can’t.

Older people with family:
Compared with Young people with family, these are typically couples with perhaps the same or more children, but these are older children and need more individual space. The couples have more established careers and greater income and ability to obtain big loans, so they can potentially afford a more expensive house.

Older childless people:
These are either like Young childless people but older (hence childfree), or like Older people with family but the children have left home. Whether single people or couples, they have more established careers and greater income and ability to obtain big loans, so they can potentially afford a more expensive house than Young childless people or Young people with family.

Type of houses in Hoardistan

Cheap houses for childless:
These are designed for Young childless people, but also suit Older childless people where the latter can’t, or don’t want to, buy more expensive houses.
There aren’t enough of these houses even for all the Young childless people, and even less so if Older childless people buy some of them.

Cheap houses for family:
These are designed for Young people with family, but are also bought by Older people with family where the latter can’t, or don’t want to, buy a more expensive house. And Older childless people may also favour these.
There aren’t enough of these houses for all the Young people with family plus Older people with family, and even less so if Older childless people buy some of them.

Expensive houses for family:
These are designed for Older people with family, but typically not for Young people with family because they are too expensive and perhaps have more room than immediately required. Such houses are often occupied by Older childless people, either because a childfree person or couple can afford one, or because this was the house of choice before the children left home and there is no good reason to move afterwards.
Let’s assume there are nearly enough of these for all the people who can currently afford them.

Rented accommodation:
There isn’t quite enough of this for all the people can’t buy their own houses.

Summary of the above

The under-supply of Cheap houses for childless and Cheap houses for family makes them expensive, because it is a seller’s market. They are typically fully occupied, except where Older childless people are living in Cheap houses for family, when there will be unoccupied bedrooms.

Expensive houses for family are often under-occupied, because many of them are owned by Older childless people. But they are typically too expensive for younger people to buy, even if they are put up for sale.

Induced “buy down” proposal in Hoardistan

The Hoardistan government is debating whether to try to persuade (or force) Older childless people people to “buy down”. In other words, sell their Expensive houses for family or Cheap houses for family and buy Cheap houses for childless. The main argument in favour is that they have a high proportion of “unoccupied bedrooms” in their houses.

But opponents of the “buy down” policy point out:

The number of “unoccupied bedrooms” is irrelevant unless they are in houses that can be afforded by the people who need those bedrooms!
And Young people with family are not only less well established in their careers, but have the added burden of bringing up young children. So while they need extra bedrooms, (although not necessarily as many as some of these houses have), they can’t afford these houses.

The reasons Older childless people have Expensive houses for family isn’t just because they used to have children who needed those bedrooms. These are often higher quality houses in better locations, with friends nearby, and are simply nice places to live during retirement, expecially after the struggles up to that point of earning enough to buy them. They can also be used to pay for such things as old-age-care without having to draw on taxes.

If Older childless people do “buy down”, they will have much more money available for house-buying than Young childless people and Young people with family. Older childless people will be able to out-bid the latter for the limited supply of Cheap houses for childless and Cheap houses for family.This will drive the price up for these houses even more than it already is.

So – if Older childless people are the only people who can afford Expensive houses for family, they should be encouraged to buy and keep them so that they don’t compete with younger people for cheaper houses!

What is the proper solution?

Obviously, the real problem here is that there simply aren’t anywhere near the right number of houses!

There will be problems until there is the right amount of houses to suit the various family types. The “buy down” proposal doesn’t eliminate the housing crisis; it simple changes it, and in some cases it makes it worse for younger people.

Analysis

The UK

The UK is more complicated than Hoardistan, but many of the above elements are present:

There certainly isn’t enough housing for everyone who want a house to have one. This is pretty well agreed by all parties, except where it is “hidden” because it is an inconvenient distraction. In this case, it would demonstrate that the focus of the report Hoarding of Housing: The intergenerational crisis in the market on unoccupied bedrooms is a side-issue. Re-distributing the current set of houses among the current set of family-units still leaves a housing crisis, just a slightly different one.

The under-occupied houses that many older people own are expensive for a range of reasons other than the number of bedrooms, including build-quality, amount of land, location, etc. Rather cynically, this report suggests “withdrawal of some ‘universal’ benefits for those living in houses worth over £500,000″. If people sell such a house because of this, who will be able to buy it? Not the younger people the report claims to be helping!

Older people who “buy down” will be able to out-bid younger people for smaller, cheaper, houses, driving their price up and making things worse for younger people!

Why was this report published?

The report starts:

The current housing crisis is not principally about Britain having enough housing but about the way it is shared between older and younger generations.

If this means “… not principally because Britain doesn’t have enough housing …”, it is totally wrong. If it means “… whether or not Britain has enough housing is not the principal reason …”, there is no evidence that it is right, and it is probably wrong.

The report appears as though someone first did a lot of work on “unoccupied bedrooms”, then tried to draw unjustified conclusions from that. Perhaps they hoped that people wouldn’t spot a vital fact about them:

The number of “unoccupied bedrooms” is irrelevant unless they are in houses that can be afforded by the people who need those bedrooms!

The report, and in fact The Intergenerational Foundation, appear to be driven by an ideology that the problems of younger people are the result of some imbalance in favour of older people that needs to be addressed at the expense of those older people.

Most older people, (myself included – I’m 64), were simply living in the UK at the time these changes were happening, and we didn’t know where they were leading, nor could we change direction. We just had to live as reasonably as we could. (Will younger people be happy to be told in future that they were responsible for the UK’s participation in the war in Iraq? After all, they were living in the UK at the time, and didn’t stop it, did they?)

Put crudely: there aren’t enough houses to go round; obviously those born first got the first chance to buy those that existed; and we haven’t all died yet, so we still have lots of those houses.

Why should we move out of houses into cardboard boxes so that people born later can occupy a greater proportion of the inadequate number of houses that exist?

Or why should we sell our houses for a fraction of what it will cost us to find alternative accommodation so that younger people with not as much money can afford to buy the houses that it took us decades to work towards?